Tech

Google to buy On2 for $106.5 million in stock

WASHINGTON (MarketWatch) -- Web-search giant Google Inc. on Wednesday said it will acquire On2 Technologies Inc., a developer of video-compression software, for $106.5 million in stock.

Under the agreement, each share of On2 common stock will be converted into Google stock worth 60 cents. Shares of Clifton Park, N.Y.-based On2
ONT
jumped almost 53% to 58 cents in premarket Wednesday trades.

On2 is a developer of software that compresses the size of video files to make them easier to play on computers or other Internet-enabled devices such as wireless phones. Customers include Sony, Nokia Corp., Skype and Sun Microsystems Inc.

"We are committed to innovation in video quality on the web, and we believe that On2's team and technology will help us further that goal," said Sundar Pichai, Google's vice President of Product Management, in a statement.

Google
GOOG
said it expects to close the deal in the fourth quarter of 2009.

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